Europe’s biggest banks provide £24bn to oil and gas companies despite net zero liabilities | Oil and gas companies

Europe’s biggest banks, led by HSBC, Barclays and BNP Paribas, have provided £24bn to oil and gas companies ramping up production less than a year after committing to net zero carbon emissions, according to the data.

Investments to drill new oil wells and exploit fresh gas reserves, backed by funds from major banks, appear to contradict commitments to international agreements and undermine efforts to accelerate the shift to renewable energy sources, according to The report.

Banks recognized that they had an important role to play in moving away from fossil fuels, and last April many of them joined the United Nations-backed Net-Zero Banking Alliance (NZBA), which obliges them to set targets for reducing carbon emissions.

However, analysis by campaign group ShareAction showed that 25 banks that pledged to cut emissions provided $33bn (£24bn) in loans and other funding to 50 companies with big plans to cut emissions. oil and gas expansion. Oil companies include US-based ExxonMobil, which has tried to defy shareholder demands to cut emissions, state oil company Saudi Aramco and London-listed companies Shell and BP which have made huge profits from price hikes gas in recent months.

Since 2016, European banks have granted financing worth $406 billion.

Climate scientists and economists have warned that halting the expansion of oil and gas production is key to reducing global carbon emissions, the main driver of the climate crisis. The International Energy Agency said last May that no new oil and gas fields should be exploited to give the world a chance to reach net zero by 2050 and avoid global warming. more than 1.5°C above pre-industrial levels.

There is also a growing consensus within the investment community that oil and gas assets could be financially damaging investments – although there are also likely to be plenty of profitable opportunities for those willing to ignore the criticism.

Underlining the refusal of international investors keen to limit the costs of switching from fossil fuels, a report published last week by accountants EY found that 70% of UK companies admit to having encountered resistance from investors and shareholders over their plans. reduction in emissions, with 42% saying their shareholders want them to wait for their competitors to act first.

Xavier Lerin, Senior Director of Research at ShareAction, said: “If demand for oil and gas declines in line with the 1.5°C scenarios, prices would fall and assets would be locked in. On the other hand, if demand did not decrease enough to limit global warming to 1.5°C, the economy would suffer severe physical climate impacts. Either way, value will be destroyed for energy companies, banks and their investors.

More than half ($19 billion) of the funding since the net zero agreement came from four of the alliance’s founders. These were HSBC and Barclays, headquartered in London, BNP Paribas in France and Deutsche Bank in Germany.

HSBC, Barclays and BNP Paribas also provided the most funding to these companies since 2016, with $59 billion, $48 billion and $46 billion respectively.

A spokesperson for the United Nations-based NZBA secretariat said members who joined the alliance in April 2021 were to set their first 2030 targets in the fall of 2022, focusing on the biggest polluters. , including oil and gas companies. The targets must “align with transition pathways without exceeding 1.5°C, as specified by credible scientific climate scenarios”, the spokesperson said.

An HSBC spokesperson said the bank would release science-based targets for oil, gas and power companies on February 22. “We are committed to working with our customers to achieve a transition to a prosperous low-carbon economy,” they said.

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A Barclays spokesperson said the bank had set “a target of an absolute 15% reduction in our energy-financed emissions, including coal, oil and gas, by 2025”, as well as restrictions on fossil fuel exploration in the Arctic, as part of an “ambition to become a net zero bank by 2050”.

A BNP Paribas spokesperson said it primarily funded “European energy companies that are broadly engaged in the transition of their model” and which would “accelerate the transition by developing renewable energy and other transformative solutions”.

The spokesperson added that there had been a “significant decrease in the support provided by BNP Paribas to oil and gas players in 2021 compared to 2019”, but that there was a “totally atypical” need for financial support. additional in 2020.

A Deutsche Bank spokesperson said carbon-intensive sectors made up “only a small share of our lending portfolio” and less than their peers. The bank would have an “intense dialogue with its customers to move from high-carbon business models to low-carbon and zero-carbon ones,” the spokesperson added.

Mary I. Bruner